Did SpaceX Payoff NASA For Extending Contracts?

Reports indicate that SpaceX may have enticed NASA with expensive goods, after a dramatic launch failure, to receive a no bid contract for additional and lucrative launches? This sweetheart deal would have blocked competition for the additional launches in a way that stinks of cronyism.

NASA received discounted prices for future cargo missions and other “significant consideration” from SpaceX in the aftermath of the loss of a Dragon cargo mission to the International Space Station, according to a NASA report.

In June of 2015, the Falcon 9, a SpaceX provided rocket, destroyed a NASA Dragon Spacecraft that was intended to dock with a space based satellite called ISS. The cargo carried by the rocket was valued at $112 million and was destroyed after the rocket crashed. One would think that a contractor would be punished for destroying $112 million in value, yet the opposite has occurred.

Elon Musk’s SpaceX used this crash to extend his contract with NASA. Space News reported that Musk used this crash to convince NASA to extend the contract.

The report indicates that, to compensate NASA for the lost cargo, SpaceX agreed to lower its prices for several later missions. In December 2015, NASA modified SpaceX’s Commercial Resupply Services (CRS) contract to add five additional missions, designated SpX-16 through 20. Those additional missions will be flown at “discounted prices,” the report stated, “to help compensate for the SpX-7 failure.”

The first inducement for NASA was to discount the cost of launches. Yet where was the competitive bidding for this contract? This seems to be something that benefitted SpaceX more than NASA and the taxpayers. That was not the only value that SpaceX offered to NASA. Space News further reported on other items of value that SpaceX provided to NASA for the sweetheart deal.

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In addition, the report stated, “NASA negotiated significant consideration in the form of Adapter hardware, integration services, [and] manifest flexibility” that SpaceX will provide to NASA at no cost. The report did not state the overall value of the concessions SpaceX made. NASA has paid SpaceX $1.7 billion under its CRS contract as of March 31, a total that includes milestone payments for missions not yet flown.

This seems like Musk gave NASA quite a few things of value in consideration for extending the additional five launch dates. The original contract was for $1.7 billion and it seems like the adapter hardware, integration services and manifest flexibility were gifts to NASA for the additional dates. That does not seem fair when considering that Musk’s SpaceX was rewarded for failure. It seems like a quid pro quo – you give me more launches and I will load NASA up with some extra value.

If other proposals for the follow-on completion of this project seemed to be tossed aside for no good reason. Why did NASA give SpaceX special treatment that blocked out competition?

It is examples like this one that shakes the faith in government for average Americans. A billionaire entrepreneur has a company that launches satellites into space and he is rewarded for failure. I don’t think any American would think it a good idea to reward the holder of a massive billion-dollar government contract when they crashed a rocket costing the taxpayers a hundred million in losses.

Cronyism is bad business for the American taxpayer, yet it can be financially rewarding if you are a contractor who knows how to game the system with gifts and insider deals.

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